Audit Service Center of China National Audit Office for Foreign Loan and Assistance Projects Audit Report * t IkC 2024 ) 13 #! AUDIT REPORT C 2024 J NO. 13 Project Name: Reduction and Phase-out of PFOS in Priority Sectors Project Granted by GEF V A : TFA4337 Grant No. : TFA4337 Project Entity: Foreign Environmental Cooperation Center, Ministry of Ecology and Environment 4: 2023 Accounting Year: 2023 目录 Content 一、审计师意见．……，.．……，二，...............．……，二，……，..........．……，,,.........．……l 1 .Auditor&5 Opinion ...........．……，.........................................................．……，.3 二、财务报表及财务报表附注…，...............．……，...............................．……5 fl .Financial Statements andNotestOtheFinancialStatements........．……5 （一）资金平衡表．......................．……，．…，..........．……，,．……，.......．……5 i,Balance Sheet,.．……，,.............．……，....................．……，.....．……，.．…，．……5 （二）项目进度表．....．……，...........................................................．……5 11 .Sumlllary of Sources andUses ofFunds by Project ...............．……，6 （三）赠款协定执行情况表．.....．……，,.,．……，,.....．……，,...........．……，．…8 111 .Statement of Implementation of Grant Agreement .......．……，……，…8 （四）专用账户收支表．…，......................．……，.............................．……9 iv .SPecial Account statement ....．……，......................................．……，．…9 （五）财务报表附注．…，.．…，.,.............................．……，...........．……，，…10 vi .Notes to the Financial Statement ........．……，.........．……，....．……，．……13 三、审计发现的问题及建议．..................．……，..............．……，...........．……16 nl.Audit Findings and Rec。～endations .......．……，.,..．……，....．……，二，.．…19 一、审计师意见 审计师意见 生态环境部对外合作与交流中心： 我们审计了全球环境基金赠款中国全氟辛基磺酸及其全氟辛基磺酞 氟优先行业削减与淘汰项目2023年12月31日的资金平衡表，以及截至 该日同年度的项目进度表、赠款协定执行情况表和专用账户收支表等特定 目的财务报表及财务报表附注（第5至15页）。 （一）项目执行单位对财务报表的责任 簖制上述财务报表是你单位的责任，这种责任包括： 1．按照中国的会计准则、会计制度和本项目赠款协定的要求编制项 目财务报表，并佼其实现公允反映； 2．设计、执行和维护必要的内部控制，以使项目财务报表不存在由 于舞弊或错误而导致的重大错报。 （二）审计责任 我们的责任是在执行审计工作的基础上对财务报表发表审计意见。我 们按照中国国家电计准则和国际审计准则的规定执行了审计工作，上述准 则要求我们遵守审针职业要求，计划和执行审计工作以对项目财务报表是 否不存在重大错报获取合理保证。 为获取有关财务报表金额和披露信息的有关证据，我们实施了必要的 审计程序。我们运用职业判断选择审计程序，这些程序包括对由于舞弊或 错误导致的财务报表重大错报风险的评估。在进行风险评估时，为了设计 恰当的审计程序，我们考虑了与财务报表相关的内部控制，但目的并非对 内部控制的有效性发表意见。审计工作还包括评价所选用会计政策的恰当 性和作出会计估计的合理性，以及评价财务报表的总体列报。 我们相信，我们获取的审计证据是适当的、充分的，为发表审计意见 提供了基础。 1 （三）审计意见 我们认为，第一段所列财务报表在所有重大方面按照中国的会计准 则、会计制度和本项目赠款协定的要求编制，公允反映了全球环境基金赠 款中国全氟辛基磺酸及其全氟辛基磺酸氟优先行业削减与淘汰项目2023 年12月31日的财务状况，以及截至该日同年度的财务收支、项目执行和 专用账户收支情况。 （四）其他事项 我们还审查了本期内报送给世界银行的第20至24号提款申请书及所 附资料。我们认为，这些资料均符合赠款协议的要求，可以作为申请提款 的依据。 本审计师意见之后，共同构成审计报告的还有两项内容：财务报表及 财务报表附注、审计发现的问题及建议。 ’结服务、 从溉纂剔26日 地址：中国北京市海淀区中关村南大街4号 邮政簖码：100086 电话：010一62 150750 2 1. Auditor's Opinion Auditor's Opinion To Foreign Environmental Cooperation Center, Ministry of Ecology and Environment: We have audited the special purpose financial statements (from Page 5 to Page 15) of the Reduction and Phase-out of PFOS in Priority Sectors Project Granted by GEF which comprise the Balance Sheet as of December 31, 2023, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Grant Agreement and the Special Account Statement for the year then ended, and Notes to the Financial Statements. Project Entity's Responsibility for the Financial Statements The preparation of the Financial Statements is the responsibility of your entity, which includes: i. Preparing and fair presenting the accompanying financial statements in accordance with Chinese accounting standards and system, and the requirements of the project grant agreement; ii. Designing, implementing and maintaining necessary internal control to ensure that the financial statements are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Government Auditing Standards of the People's Republic of China and International Standards on Auditing. Those standards requi re that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial 3 statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is appropriate and sufficient to provide a basis for our audit opinion. Audit Opinion In our opinion, the financial statements identified in the first paragraph present fairly, in all material respects, financial position of the Reduction and Phase-out of PFOS in Priority Sectors Project Granted by GEF as of December 31, 2023, its financial receipts and disbursements, the project implementation and the receipts and disbursements of the special account for the year then ended in accordance with Chinese accounting standards and system, and the requirements of the project grant agreement. Other Matter We also examined the withdrawal application from No.20 to No.24 and the attached documents submitted to the World Bank during the period. In our opinion, those documents comply with the project grant agreement and can serve as basis for grant withdrawal. The aud 41-t; {4 t, of the Auditor's Opinion and two more parts herein na cial tts and Notes to the Financial Statements, Audit Findin s-a Re tcme lys. Audit Center of Cyna National Audit Office for Foreign Loan and AssistankW#41cts June 26, 2O " Address: No. 4 Zhongguancun South Avenue, Haidian District, Beijing, P.R.China Postcode: 100086 Tel.: 86-10-62150750 The English translation is for the convenience of report users; Please take the Chinese audit report as the only official version. 4 H . Financial Statements and Notes to the Financial Statements i. Balance Sheet BALANCE SHEET 2023 * 12 fi 31 H (As of December 31, 2023) 48: # &&MR A94RRAM9tWAR AY:TFA4337 Name of the Project: Reduction And Phase-out of PFOS in Priority Sectors Grant No.: TFA4337 Project Granted by GEF Entity Name: Foreign Environmental Cooperation Center, Ministry of Currency Unit: RMB Yuan Ecology and Environment Application of Beginning Balance Ending Total Sources of Ending Ending Fund Balance Fund Balance Balance Total Project 57,157,745.59 98,903,838.86 Counterpart Expenditures financing Fixed Assets - - i 70,489,285.89 105,823,569.71 Transferred Total Grant 2, J 4tT fOIff, , Construction -3,312,075.90 -3,937,028.16 Expenditures to be Total Payable Disposed 3.~ti 44,1-mk Investments Oteraybl Transferred-out OtherPayable Construction in 57,157,745.59 98,903,838.86 Other Fund Progress Equipment- - Retained - Earnings lncludng:Equipment Losses in Suspense Total Cash and 10,019,464.40 2,982,702.69 - - Bank Cash in Bank 10,019,464.40 2,982,702.69 - - -1Includin:Special 9,021,775.20 1,877,541.89 - - Account 2. 9k-- Cash on Hand Total Prepaid and Receivable Total Fixed Assets Total Application 67,177,209.99 101,886,541.55 Total Sources of 67,177,209.99 101,886,541.55 ofFund Fund 5 ( -:-) IX t4 ii. Summary of Sources and Uses of Funds by Project Component SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT I *J & E 2023 4- 12 A 31 H (For the period ended December 31,2023) 04 F A' P 1I: TFA4337 Name of the Project: Reduction And Phase-out of PFOS in Priority Grant No.: TFA4337 Sectors Project Granted by GEF Entity Name: Foreign Environmental Cooperation Center, Ministry of Currency Unit: RMB Yuan Ecology a d Environment * M 'w it Current Period Cumulative Current Current Period Current Life of PAD Cumulative Cumulative year Actual period % Actual % Budget completed completed Tota S e F- 35, 334, 283. 82 - 151, 562, 500. 00 105, 823, 569. 71 69. 82% Total Sources of Fund -, A A,z k, - 35, 334, 283. 82 - 151,562,500.00 105, 823, 569. 71 69. 82% International Financing 1. - 35, 334,283.82 - 151,562,500.00 105,823,569.71 69. 82% IBRD Counterpart Financing oa Apliato o Fud - 41,746,093.27 - 151, 562, 500.00 98, 903, 838. 86 65. 26% foal Application of Funds 1PFOS Pc ion - 1, 641, 000. 00 - 2, 500, 000. 00 2, 356, 800. 00 94. 27% PFOS Production Reduction 2.PFOS *)T Ai - 27, 400, 384. 61 - 56, 375, 000. 00 35, 957, 194.30 63. 78% Reduction of PFOS Use Policy and Technical - 10, 129, 514. 70 - 85, 137, 500. 00 51, 046, 629. 80 59. 96% Assistance 4. 9Management - 2, 575, 193. 96 - 7, 550, 000. 00 9, 543, 214. 76 126. 40% Project Management t Difference - -6, 411, 809. 45 - 6, 919, 730. 85 - Change in Receivables 2.Cnge in ft,Tj - 624, 952. 26 - - 3, 937, 028. 16 Change in Payables 3.Cnein h d Bt n - -7,036,761.71 - - 2,982,702.69 Change in Cash and Bank 4. j Other 6 � и о � � � � `' � �S£?L � м�� р� 33 у ч� � � 1� � � q Н � � � ~ � � � � ' о �У v С'' и �z ,г�. ®°' � nI�' � � �,, � гз г, и �� � � � �к� 33 � � д ® F�� � С7 �� U �.}а( � ы о оИ. ® � �w � � � о о о са сд ® О М СС [� СО � аµ� .� О д' б: �t' СО НЁ у СО � cD CV 00 � Н ы аА `,s,°� й � � о � l'i-� ��1 М б� С � ° � N Ln гч б� 00 М 1С Q� � � �'+ i i � i i о н � �, '� у �" �� ��� � � ,� w м '� ы � � ° �� �� с� -( ,., � � п М � n , � � � � г" ,� п с=. �о � � т � � � А �� V W � � � � � N N � �, � д ., \\ � сиг. й � � °� s�'. 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Notes to the Financial Statement Notes to the Financial Statement 1. Introduction of the Project The Global Environment Facility Grant Agreement of Reduction And Phase-out of PFOS in Priority Sectors Project (hereinafter referred to as GA) was signed by the International Bank for Reconstruction and Development (hereinafter referred to as VM)with the Ministry of Finance, People's Republic of China (hereinafter referred to as MOF) on June 6, 2017. An implementation agreement was signed between MOF and the Ministry of Ecology and Environment (hereinafter referred to as MEE) to cause Foreign Environmental Cooperation Center (hereinafter referred to as FECO) of MEE to be responsible for the use, management and supervision of the grant. The objectives of the project are to help China fulfill its mandatory obligation to phase out PFOS under the Stockholm Convention on Persistent Organic Pollutants, to minimize the use and release of PFOS and to facilitate the reduction and phase-out of PFOS in priority sectors. The main activities of the project include: a) choose the PFOS production sector and the PFOS use sectors with large quantities and high-risk to carry out industrial reduction and phase-out activities; b) promote the improvement of relevant policies and regulatory capacity and c) implement substitute incentive mechanism to promote production reduction and so on. The total cost of the project is USD 177.25 million which is a combination of USD 24.25 million grant from GEF and USD 153 million from co-financing. The closing date of the project is June 30, 2024. 2. Accounting Principle 2.1 The financial statements were prepared in accordance with the Accounting Principle of the Financial Management Guidelines of Projects Financed by GEF (Caiji [2017]33) and Accounting Principle of the World Bank Loan Project (Caijizi [2000]13) from the Ministry of Finance. 2.2 Bookkeeping of the project is in conformity with the principle that the grant in the financial report is the grant whichhas been received by FECO and the expenditure in the financial report is the expenditure which has been disbursed by FECO. The debit/credit double entry bookkeeping system. is applied for bookkeeping purpose. Currency unit for accounting is USD. 13 2.3 Accounting period is the Gregorian calendar, which is from January 1 to December 31. Financial Statement for the current accounting period is from January 1, 2023 to December 31, 2023. 2.4 The exchange rate defined in the Project Appraisal Document (PAD) (USD 1=RMB 6.25 yuan) is used as the reporting exchange rate in the Summary of Sources and Uses of Funds when calculating the total project cost (life of PAD), the beginning exchange rate used is the exchange rate as of December 31, 2022 (USD1=RMB 6.9646 yuan) and the closing exchange rate used is the exchange rate as of December 31, 2023 (USD1=RMB 7.0827 yuan) in other financial statements if mentioned. 3. Scope of the Consolidated Statements 3.1 The Special Account Statement was prepared by FECO. 3.2 Consolidation scope of the financial statement covers the financial statements of FECO and two local project implementation entities, namely, the project management office of Hubei Province (hereinafter referred to as Hubei PMO), and the project management office of Guangdong Province (hereinafter referred to as Guangdong PMO) and the special account statements. FECO is responsible for preparing its own financial statements and summarizing financial statements of two project implementation entities and the special account statements. Each entity has the responsibility for the authenticity and integrity of its own financial statements. 4. Notes to the Statement of Special Account The Special Account of the project was managed by FECO and set up in China Minsheng Banking Corporation, Beijing Finance Street Branch. The account number is 697933122, currency unit is USD. The first withdrawal (namely turn-over fund) was USD 2 500 000.00. The opening balance was USD1 295 375.93, the amount deposited by the WB was USD4 820 052.25, total interest income was USD113.83, total amount withdrawn from the Special Account was USD5 850 453.57, interest expense was USDO.00, and the closing balance as of December 31, 2023 was USD265 088.44. 5. Notes to the Financial Statement Accounts 5.1 Project Expenditure As of December 31, 2023, the current project expenditure is RMB 41 746 093.27yuan, and the accumulated project expenditure is RMB 14 98 903 838.86 yuan. The details are as following: the current payout for PFOS production reduction is RMB 1 641 000.00 yuan, and the accumulated payout is RMB2 356 800.00 yuan; the current payout for reduction of PFOS use is RMB27 400 384.61 yuan, and the accumulated payout is RMB 35 957 194.30 yuan; the current payout for policy and technical assistance is RMB 10 129 514.30 yuan, and the accumulated payout is RMB 51 046 629.80 yuan; the current payout for project management is RMB 2 575 193.96yuan, and the accumulated payout is 9 543 214.76 yuan. 5.2 Cash and Bank The balance of Cash and Bank account is RMB2 982 702.69 yuan as of December 31, 2023, which is the ending balance of Special Account is USD 265 088.44, approximately RMB1 877 541.89 yuan. The ending balance of Guangdong PMO Special Account is RMB 0 yuan and the ending balance of Hubei PMO Special Account is RMB 1 105 160.80 yuan. 5.3 Grant As of December 31, 2023, the current grant received is USD4 820 052.25, the accumulated grant received is USD 14 941 133.99, approximately RMB 105 823 569.71 yuan. 5.4 Payables The ending balance of Payables is RMB -3 937 028.16yuan, which includes the interest of the DA is RMB 21 952.19yuan, the prepaid cost incurred by Guangdong PMO is RMB 672 596.60 yuan and the exchange rate loss is RMB 4 631 576.95 yuan. 15 三、审计发现的问题及建议 审计发现的问题及建议 除对财务报表进行审计并发表审计意见外，审计中我们还关注了项目 执行过程中相关单位遵守国家法规和项目赠款协定情况、内部控制和项目 管理情况，以及上年度审计建议整改落实情况。我们发现该项目存在如下 问题： （一）项目立项方面。 对外合作与交流中心电镀园区污水处理示范项目前期准备不充分， 示范工作未按计划开展，造成含PF0s废水处理量目标未能实现，影响 项目示范效果。 根据项目文件，本项目原定佼用160万美元赠款资金，选择三家电镀 园区，通过对园区污水处理厂原有的污水处理设备进行升级改造，对园区 内电镀企业排放的含PF0s废水进行处理示范，从2021年至2023年，经 过3年示范运行，实现减少72万吨含PFOS废水排放目标。 审计发现，2022年6月，对外合作与交流中心将电镀园区污水处理 示范项目预算上调至300万粎元后，确定了两家污水处理厂参与示范，并 于2023年2月签籲转赠协议，转赠金额共计人民币1 869.25万元。转赠 协议约定，两家污水处理厂示范工作主要目标之一为示范并正常运行新增 污水处理系统至少半年，且每家处理含PF0s废水不少于36万吨。2023 年8月，两家污水处理厂完成设备升级改造开始运行，7个月后于2024 年3月停止运行。对外合作与交流中心以污水处理厂总排口水量作为考核 指标，认定两家污水处理厂已完成处理含PF0s废水72万吨的目标，但 总排水口中大量废水为不含PFOS废水，并未经过新增系统处理，两家污 水处理厂实际仅处理含PFos废水共计11 .21万吨，远低于处理含PFOS 废水72万吨的示范目标，影响项目示范效果。 造成上述问题的主要原因是对外合作与交流中心项目前期准备不充 分，未考虑示范项目可行性，项目实际执行过程中电镀园区参与度低， 示范活动不能按计划开展。2024年3月示范项目结束，示范企业仅 l6 半年时间示范运行，且两家污水处理厂PF0s废水处理设备日处理能 力分别仅为1000吨和500吨，含PFOS废水处理量目标无实现可能性。 上述做法不符合《全球环境基金赠款项目管理办法》（财际〔2007〕 45号）第八条。。项目实施单位负责全球环境基金赠款项目的实施和管理…… 〔一）负责全球环境基金赠款项目的组织实施，落实赠款协议和赠款执行 协议所规定的各项工作和安排，包括参与前期准备……开展项目活动、推 进项目进度、监测项目绩效等，确保项目取得预期成果。……”的规定。 审计建议你单位要加强前期准备和项目设计，确保项目示范效果，提 升赠款资金使用效益。 （二）项目推进、目标实现和绩效方面。 对外合作与交流中心未有效督促应急管理部消防产品合格评定中心 （以下简称消防评定中心）推进项目实施，消防子项目执行进度缓慢， 不利于PFoS物质以可持续方式在消防行业削减与最终淘汰目标的实现。 2019年8月，对外合作与交流中心与消防评定中心签署“消防行业 PFOS管控与削减子项目”咨询服务合同，由消防评定中心通过实施一系列 示范和推幼等活动，逐步淘汰和替代PFOS消防泡沫在我国的使用，推动 中国消防行业PFOS替代物与替代技术的科学应用，合同执行期为2019 年7月至2022年12月。 根据合同约定，消防评定中心应于2021年底前通过大型火灾试验验 证不含PFOS泡沫灭火剂性能的安全性、可靠性，并研究修订相关标准工 作。但在合同执行过程中，对外合作与交流中心未采取有效措施督促消防 评定中心推进合同实施。截至2023年底，上述合同约定的任务仍未完成， 导致无法确定更安全、可靠的替代技术方案，不利于2024年起禁止PFos 类物质用于生产灭火泡沫药剂相关政策的实施，影响PF0s物质以可持续 的方式在消防行业削减与最终淘汰目标的实现。 上述做法不符合《国际金融组织和外国政府贷款赠款管理办法》（财 政部令第85号）第十二条“项目实施单位履行下列职责：……（二）按照 贷款、赠款法律文件和国内相关规定，……开展项目活动，推进项目进度， 监测项目绩效等；……”的规定。 17 审计建议你单位加强对子项目执行的监督管理，督促子项目实施单位 加快项目实施，保证示范项目目标实现。 对本报告指出的问题，请你单位切实抓好整改，在收到审计报告之日 起60日内将整改结果书面报告审计署国外贷援款项目审计服务中心。审 计籲国外贷援款项目审计服务中心将视情况对整改结果进行检查。 l8 111. Audit Findings and Recommendations Audit Findings and Recommendations In addition to performing the audit and expressing an opinion on the financial statements, we also make observations with respect to compliance with applicable provisions of state laws and regulations and the grant agreement of the relevant entities, its internal financial control and project management during the project implementing process, as well as the implementation of the audit recommendations issued in the previous year. We found the following issues in project management: 1. Project Approval The preparation of the Electroplating Park Wastewater Treatment Demonstration Project implemented by FECO was not adequate, and the demonstration work did not proceed as planned, resulting in the failure to achieve the target of treating PFOS-contained wastewater, which affected the project's demonstration effect. According to the project documents, the project originally intended to use USD 1.6 million of grant funds to select three electroplating parks and upgrade the existing wastewater treatinent equipment in the parks to treat the PFOS-contained wastewater discharged by the electroplating enterprises in the parks, with a goal of reducing PFOS-contained wastewater discharge by 720 000 tons over a three-year period from 2021 to 2023. The audit found that FECO revised the Electroplating Park Wastewater Treatment Demonstration Project budget to USD 3 million in June 2022, and determined that two wastewater treatment plants would participate in the demonstration, and signed the implementation agreement in February 2023, RMB 18.69 million yuan in total. The implementation agreement stipulated that one of the main goal of the demonstration work was the two wastewater treatment plants demonstrated and operated the added wastewater treatment system for at least half a year, and each plant should treat at least 360 000 tons of PFOS-contained wastewater. In August 2023, the two wastewater treatment plants completed the equipment upgrade and began to operation, and stopped the operation after seven months later, which in March 2024. FECO assessed the total discharge volume from the main drain of wastewater treatment plants as the assessment indicator and identified that two wastewater treatment plants 19 had achieved their target of treating 720 000 tons PFOS-contained wastewater, but the majority of the discharged wastewater from the main drain was not PFOS-contained wastewater, and had not been treated by the added system. In fact, the two wastewater treatment plants had only treated 112 100 tons of PFOS-contained wastewater, far below than the demonstration target of 720 000 tons of PFOS-contained wastewater, which impacted on the project's demonstration effect. The main reason for the above problems was that FECO did not conducted sufficient preliminary preparation for the project, did not considered the feasibility of the demonstration project, and the participation degree of the electroplating parks was low, which resulted that the demonstration activities could not proceed as planned. The demonstration project ended in March 2024, the demonstration enterprises only took half a year of demonstration operation, and the daily treatment capacity of the PFOS-contained wastewater treatment equipment of two wastewater treatment plants was only 1 000 tons and 500 tons respectively, making it impossible to achieve the target of treating PFOS-contained wastewater. The above actions were not in accordance with the regulations of Article 8 of the Regulations on the Management of Global Environment Fund Grant Projects (Caijizi [2007]45) "the implementing unit is responsible for the implementation and management of the Global Environment Fund grant project... (I) be responsible for the organization and implementation of the Global Environment Fund grant project, implement the work and arrangements stipulated in the grant agreement and the grant implementation agreement, including participating in the preparation of the project in advance... The regulation stipulates that project activities should be carried out, project progress should be advanced, and project performance should be monitored to ensure that the project achieves its expected outcomes." We suggested your entity to strengthen the preliminary preparation and project design to ensure the demonstration effects of the project and enhance the utilization efficiency of the grant funds. 2. Project Implementation, Goal Achievement and Performance. FECO did not effectively supervise the China Certification Center for Fire Products, Ministry of Emergency Management (hereinafter referred to as CCCF) in promoting the project implementation, and the progress 20 of the fire sub-project was slow, which was not conducive to achieving the goal of sustainably reducing and ultimately eliminating PFOS substances in the fire industry. In August 2019, FECO and CCCF signed a consulting service contract for the Technical Assistance to Manage and Eliminate PFOS Use for Fire-fighting Sector Subproject, under which CCCF would implement a series of demonstration and promotion activities to gradually phase out and replace PFOS fire foam in China and promote the scientific application of PFOS substitutes and alternative technologies in the Chinese fire industry. The contract period was from July 2019 to December 2022. According to the contract, the CCCF was required to verify the safety and reliability of non-PFOS fire-fighting foams through large-scale fire tests by the end of 2021, research and revise relevant standards. However, during the implementation of the contract, FECO did not take effective measures to supervise the CCCF in promoting the contract implementation, and by the end of 2023, the tasks stipulated in the contract had not been completed, and has made it unable to determine the more safe and reliable alternative technology solution, which was not conducive to the implementation of the policy that bans PFOS-related substances for the production of fire-fighting foams starting in 2024, and affected the goal of reducing and ultimately eliminating PFOS substances in a sustainable way in the fire-fighting industry. The above action is not in accordance with the regulations of Article 12 of the Measures for the Administration of Loans and Grants from International Financial Organizations and Foreign Governments (Ministry of Finance Decree No. 85) " The project implementation entity shall perform the following duties ... conduct the project activities, promote the project progress, monitor the project performance, etc.". We suggested that your entity to strengthen its supervision and management of the implementation of sub-projects and urge sub-project implementing unit to accelerate project implementation to ensure the achievement of the demonstration project goals. For the audit findings in this report, your entity shall effectively enhance the rectification and report the rectification results to Audit Service Center of 21 China National Audit Office for Foreign Loan and Assistance Projects in a written form within 60 days since receiving the report. Audit Service Center of China National Audit Office for Foreign Loan and Assistance Projects will inspect the rectification results as appropriate 22